Consultation – Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health

Consultation – Implementation of
paragraph 6 of the Doha Declaration on the TRIPS Agreement and
Public Health (excerpts)

Enclosed please find a consultation
paper on the implementation of paragraph 6 of the Doha Declaration
on the TRIPS Agreement and Public Health in the Patent Regulations
of 20 December 1996 No. 1162.

The TRIPS Agreement, which is part
of the WTO Agreement, lays down that a compulsory licence, i.e. a
licence issued by the public authorities to use a patented
invention without the consent of the patent-holder, is to be issued
mainly with a view to supplying the domestic market. The Decision
by the WTO General Council of 30 August 2003 (the General Council
Decision) makes exceptions to this limitation on exports for
pharmaceutical products. The decision makes it possible for States
that lack manufacturing capacity to import pharmaceutical products
on the basis of a compulsory licence. The main purpose of the
decision is to give developing countries access to key
medicines.

The consultation paper proposes
that the Patent Regulations should be amended in such a way as to
allow companies in Norway to be granted compulsory licences to
produce patent-protected medicines for export in accordance with
the General Council Decision. The time limit for comments is 16
April 2004. Comments are to be sent to Justisdepartementet,
Lovavdelingen, Boks 8005 Dep, 0030 Oslo. Comments could also be
sent electronically to
jd-arkiv-lovavd@jd.dep.no
.

The recipients of this letter are
requested to submit the consultation paper to bodies or individuals
who are not on the list of addressees but who should be given an
opportunity to express their views. The consultation paper and
letter may be found in Norwegian at:
http://odin.dep.no/jd/norsk/publ/hoeringsnotater/index-b-n-a.html
.

Consultation – Implementation of
paragraph 6 of the Doha Declaration on the TRIPS Agreement and
Public Health in Norwegian law

(Compulsory licence for the export of pharmaceutical
products to developing countries)

1. Summary

This consultation paper describes
the proposed amendments to the Patent Regulations of 20 December
1996 No. 1162, which will allow companies in Norway to be granted
on request a compulsory licence to produce patent-protected
pharmaceutical products with a view to exporting them in accordance
with the WTO General Council Decision. The decision is enclosed
with the consultation paper, and is also available on the Internet
at
http://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm

2. Background

[Not translated]

3. The General Council Decision

[Not translated]

4. Relationship to Norwegian law

The provisions concerning
compulsory licences in sections 45 ff. of the Norwegian Act of 15
December 1967 No. 9 relating to patents implement the provisions of
Article 31 of the TRIPS Agreement. The General Council Decision
allows exceptions to be made from the provisions of Article 31(f),
which impose limitations on exports, and defines more closely the
provision concerning remuneration set out in Article 31(h).
Implementing the General Council Decision will make it necessary to
incorporate these special provisions into the Norwegian legislation
on compulsory licences.

It will also be necessary to lay
down provisions specifying the scope of application of the General
Council Decision, i.e. under what circumstances compulsory licences
may be granted under this arrangement.

Section 49 of the Patents Act was
amended by the Act of 19 December 2003 No. 127. Section 49, new
fifth paragraph, which has not yet entered into force [ed. note:
entered into force on 1 February 2004], reads as follows:

"A compulsory licence shall be
issued mainly with a view to supplying the domestic market. The
King may by regulations prescribe rules that deviate from
this."

According to the legislative
history, the main purpose of section 49, fifth paragraph, second
sentence, is to make it possible to issue regulations that will
allow Norwegian companies to manufacture pharmaceutical products
under a compulsory licence with a view to exporting them to
developing countries. Proposition No. 86 (2002-2003) to the
Odelsting, p. 80, second column, states that:

The authority stipulated in the
fifth paragraph, second sentence, to prescribe rules that deviate
from this condition has primarily been laid down in connection with
the current negotiations in the Council for TRIPS on the use of
compulsory licences to ensure the supply of medicines to developing
countries. The condition that compulsory licences are to be granted
mainly with a view to supplying the domestic market means that
countries that lack domestic manufacturing capacity may have
problems in utilising the right to grant compulsory licences. This
applies especially to developing countries. Depending on the
outcome of the negotiations in connection with the TRIPS Agreement,
it may in the future be possible for Norwegian companies to
manufacture pharmaceutical products under a compulsory licence for
export to developing countries. The authority to make exceptions
from the requirements in section 49, fifth paragraph, first
sentence, allows for such a situation.

It is therefore proposed that the
provisions for implementing the General Council Decision are
prescribed by regulations pursuant to section 49, fifth paragraph,
of the Patents Act, cf. the general authority to lay down
provisions in section 69, first paragraph, of the Act. It is
proposed that the new provisions should be introduced in a separate
chapter before what is currently Chapter 15, Miscellaneous
provisions, of the regulations. The numbering of the chapters and
sections of the draft regulations has been amended in relation to
the new provisions that will be included in accordance with the
entry into force of the provisions relating to the EC directive on
the legal protection of biotechnological inventions.

Economic and administrative consequences

The implementation of the General
Council Decision in Norwegian law will make it possible for
companies in Norway to manufacture pharmaceutical products under a
compulsory licence for export to States that are unable to produce
these products themselves. This will help to give developing
countries better access to key medicines.

The pharmaceutical industry in
Norway is relatively small, and there are probably not many
companies with the capacity to take on the task of manufacturing
pharmaceutical products under compulsory licence for another State.
It is therefore not certain what the consequences will be of the
implementation of the General Council Decision.

The amendment to the regulations
will not have appreciable economic or administrative consequences
for the courts or the Competition Authority, which are the bodies
authorised to grant compulsory licences in Norway.

Comments on the individual provisions of the
regulations

Section 107

The first paragraph lays down that
a pharmaceutical company in Norway may under certain specified
conditions be granted a compulsory licence to use an invention
protected by a patent with a view to manufacturing pharmaceutical
products for export to another State. Thus producers that apply for
a compulsory licence have a legal right to such a licence if the
conditions have been fulfilled. This ensures a greater
predictability than if compulsory licences are granted on a
discretionary basis, and reduces the risks inherent in starting
negotiations on supplying products before a compulsory licence has
been granted in Norway. If the importing State’s request to import
the pharmaceutical product falls within the scope of the General
Council Decision and the provisions of the TRIPS Agreement, the
Norwegian authorities should not evaluate independently whether
there are important public interests involved, cf. section 47 of
the Patents Act. The question of whether there are important public
interests indicating that a compulsory licence should be granted
pursuant to section 47 of the Patents Act must be evaluated on the
basis of the needs of the importing State.

A compulsory licence may only be
granted if the pharmaceutical products in question are to be
produced for export to an "eligible importing State". The State
must have requested the producer to supply the pharmaceutical
products, but a final agreement is not required.

The provision does not prevent the
producer from exporting to more than one State as long as the
conditions for a compulsory licence have been met in each case.

For the purpose of the regulations,
an eligible importing State is any State that, at the time when the
application for a compulsory licence is submitted, is designated by
the UN as a least developed country, or that has insufficient
manufacturing capacity. The State must also have made a
notification to the Council for TRIPS in accordance with the
Decision of the General Council of 30 August 2003, paragraphs 1(b)
and 2(a) (the General Council Decision).

It is also proposed that States
that are not Members of the WTO should be given the opportunity to
conclude agreements on the import of pharmaceutical products
manufactured under compulsory licence in Norway, cf. section 107,
second paragraph, of the draft regulations. However, such States
must be designated as least developed countries by the UN. The
importing State must also have made a notification to the Ministry
of Foreign Affairs concerning the information contained in the
General Council Decision.

Section 108

The first paragraph sets out the
remaining conditions for granting a compulsory licence for exports
to an eligible importing State.

One condition for obtaining a
compulsory licence is that the producer has first unsuccessfully
tried to obtain a voluntary licence, cf. Article 31(b) of the TRIPS
Agreement. This is not necessary in the case of a national
emergency or other circumstances of extreme urgency or in cases of
public non-commercial use. The provision set out in section 49,
first paragraph, of the Patents Act (amended by Act of 19 December
2003 No. 127) is based on this, cf. Proposition No. 86 (2002-2003)
to the Odelsting, p. 80, first column. The General Council Decision
does not make an exception from this provision of the TRIPS
Agreement.

Pharmaceutical products that are
manufactured under this arrangement will probably normally be
subject to non-commercial use under the auspices of the public
authorities of the importing State. It is possible, however, that
commercial health institutions in the importing State will also be
given access to the products. It cannot be assumed, therefore, that
it will never be necessary to first try to obtain a voluntary
licence, and this must be evaluated on a case-to-case basis.

Thus, according to the first
paragraph, item 1, of the draft of section 108, the producer must
first have tried to obtain a licence on reasonable commercial terms
and conditions by agreement, insofar as required pursuant to
section 49, first paragraph, of the Patents Act. In considering
what are "reasonable commercial terms and conditions", account must
be taken of the economic value that the exploitation of the
invention represents for the importing State, cf. section 108,
second paragraph. If the right-holder demands a fee that cannot be
regarded as reasonable, the condition for a compulsory licence
pursuant to the first paragraph, item 1, is fulfilled.

A compulsory licence may only be
granted if the pharmaceutical product in question is covered by
paragraph 1(a) of the General Council Decision, see first
paragraph, item 2, of the draft of section 108.

Another condition is that the
product must be produced only for export to the eligible importing
State in order to satisfy the State’s current need for the product,
as described in the notification mentioned in section 107, see
first paragraph, item 3, of the draft of section 108. A compulsory
licence must be limited to such cases. The provision is based on
paragraph 2(a) and (b) of the General Council Decision.

The fact that it is the importing
State’s "current" need that are to be met means that the quantity
specified in the notification is not necessarily the quantity to be
taken into account. It is the situation at the time when the
request for a compulsory licence is submitted that is applicable.
The importing State’s own assessment on this point is to be used
(see above), but the compulsory licence must be for a quantity that
is within the limits of the notification pursuant to the General
Council Decision. The notification by the importing State will
therefore provide an upper limit for the rights that may be
granted.

Another condition is that if the
invention is not protected by a patent in the eligible importing
State, the said State must grant or be intending to grant a
compulsory licence pursuant to Article 31 of the TRIPS Agreement
and the General Council Decision. This condition is specified in
section 108, first paragraph, item 4 of the draft amendments, which
is based on paragraph 2(a) of the General Council Decision.

The question arises whether the
pharmaceutical products should have to satisfy certain standards of
quality, e.g. whether it would be necessary for the product to have
received regulatory approval in Norway or another EEA country. The
draft regulations do not contain such a requirement. Thus it is the
quality requirements in the importing State that will determine
which pharmaceutical products may be manufactured in Norway for
export under a compulsory licence. However, the pharmaceutical
product must be manufactured in accordance with Norwegian statutory
requirements concerning the manufacturing process.

The second paragraph sets out that
when assessing what are reasonable commercial terms and conditions
pursuant to section 49, first paragraph, of the Patents Act, and
when determining the remuneration to the right-holder pursuant to
section 50, second paragraph, of the Act, account is to be taken of
the economic value to the importing State of the use of the
invention. The provision is based on paragraph 3 of the General
Council Decision, which defines more closely the provision of
Article 31(h) of the TRIPS Agreement, which states that the
remuneration is to take account of "the economic value of the
authorization".

The fact that market conditions in
the importing State are to be taken into consideration often means
that the remuneration is fixed at a relatively low level.

According to the third paragraph of
section 108, the labelling must show that the product has been
manufactured under compulsory licence in Norway for export in
accordance with the General Council Decision. In the decision to
grant a compulsory licence the court or the Competition Authority
may stipulate more detailed requirements concerning the packaging.
This provision is based on paragraph 2(b)(ii) of the General
Council Decision. It is intended to make it easier to prevent the
product from being re-imported to Norway or sold in a State other
than the eligible importing State, which would be in conflict with
the General Council Decision.

Section 109

The provision obliges the recipient
of a compulsory licence to post certain information on its website.
This information consists of the quantities being manufactured, the
name of the importing State and distinguishing features of the
packaging, see paragraph 2(b)(iii) of the General Council
Decision.

Regulations amending the PATENT
regulations (Implementation of paragraph 6 of the Doha Declaration
on the TRIPS Agreement and Public Health)

Laid down … pursuant to sections 49 and 69 of
the Act of 15 December 1967 No. 9 relating to patents. Submitted by
…

The following amendments shall be
made to the Regulations of 20 December 1996 No. 1162 relating to
the Patents Act:

New Chapter 17 shall read as
follows:

Chapter 17 Compulsory licences for
the export of pharmaceutical products

Section 107

When the requirements set out in
section 108 have been complied with, a producer of pharmaceutical
products in Norway shall be granted on application a compulsory
licence to manufacture pharmaceutical products for export to an
eligible importing State that has requested the producer to supply
the products. For the purpose of these regulations, an eligible
importing State is one that:

at the time in question has been
designated by the UN as a least developed country or that has
insufficient manufacturing capacity, and

has made a notification to the
Council for TRIPS in accordance with the Decision of the General
Council of 30 August 2003, paragraphs 1(b) and 2(a) (the General
Council Decision).

Least developed countries that are
not parties to the WTO Agreement are considered to be eligible
importing States if they have made a notification to the Norwegian
Ministry of Foreign Affairs concerning the information contained in
the General Council Decision.

Section 108

A compulsory licence may only be
granted pursuant to section 107 if

the producer has tried to obtain a
licence by agreement insofar as this is required pursuant to
section 49, first paragraph, of the Patents Act,

the product is covered by paragraph
1(a) of the General Council Decision,

the product is only to be produced
for export to the eligible importing State in order to cover the
said State’s current need for the product, as described in the
notification mentioned in section 107, and

the invention is not protected by a
patent in the eligible importing State or the eligible importing
State has granted or intends to grant a compulsory licence pursuant
to Article 31 of the Agreement of 15 April 1994 on Trade-Related
Aspects of Intellectual Property Rights (the TRIPS Agreement) and
the General Council Decision.

When assessing what are reasonable
commercial terms and conditions pursuant to section 49, first
paragraph, of the Patents Act, and when determining the
remuneration pursuant to section 50, second paragraph, of the
Patents Act, account shall be taken of the economic value to the
importing State of the use of the invention.

It shall be clear from the
packaging that the pharmaceutical product has been produced under
compulsory licence in Norway for export in accordance with the
General Council Decision. More detailed requirements concerning the
design of the packaging may be imposed in the decision to grant a
compulsory licence.

Section 109

The holder of a compulsory licence
shall post information on its website in accordance with paragraph
2(b)(iii) of the General Council Decision.